By Zachary S. Fagenson
As Wells Fargo continues its nationwide, multi-year conversion of Wachovia Bank’s systems, staff and branches into its own, Chairman Richard Kovacevich said the bank is eagerly looking at Florida as a place to both expand its core lines of business, such as credit cards, and to capitalize on the strengths of its most recent purchase, Wachovia.

While Florida will be one of the first states that didn’t already have a Wells Fargo presence to see Wachovia branches turn into Wells Fargo stores, the bank is already bolstering its ranks statewide by about 29%, with a significant portion of that expansion in Miami.

The company, according to Shelley Freeman, regional president of community banking in Florida for Wells Fargo, is in the process of hiring 400 bankers statewide. It’s already hired 100, 60 of them in South Florida, she said.

Branch conversions, Mr. Kovacevich said, were first done in states that had both Wachovia and Wells Fargo branches, such as Wells Fargo’s home, California. The conversion of Florida branches is expected to begin in 2011.

And Mr. Kovacevich, although retiring as chairman at year’s end, said consumers can expect to see staff continually added to Wells Fargo stores.

"I can say with a great deal of confidence that we will end up, three years from now or five years from now, with more stores than we have in total," he said. "We’ll wind up with twice the number of people in the stores that we have today."

The lion’s share of the most recent hires, Ms. Freeman added, will bring in retail bankers, but there’ll also be growth in the bank’s number of business and commercial bankers.

But the number of branches, which Mr. Kovacevich and Wells Fargo calls stores due to the number of products sold in one, may not grow quite as fast as staff.

After the Wachovia merger, it has 740 branches and $71 billion in deposits around the state and 65 offices and about $10 billion in deposits in Miami-Dade County, and is No. 1 in both.

"We’re over the 10% limit so we can’t acquire," Mr. Kovacevich said when asked whether Wells Fargo would purchase troubled smaller banks. "We’ve got plenty to do too."

The purchase of Wachovia gave Wells Fargo more than 10% of the nation’s deposits. Further growth through acquisition is prohibited by federal law.

Wells Fargo purchased Wachovia in late 2008 for about $12.7 billion. The move saddled the San Francisco-based bank with billions in mortgage and real estate loans but also made it the fourth largest bank in the country by assets. Wells Fargo also has the nation’s largest branch network with more than 6,600 offices in 39 states and Washington, DC.

And the majority of its brick-and-mortar growth here, he added, will be "organic."

Mr. Kovacevich was cautiously optimistic on the future of residential real estate, small businesses and international trade and finance.

A split has emerged over the past several months where small businesses, already dealing with cutbacks, layoffs and slumping revenues, have little access to new credit and existing credit has either been reduced or wholly removed. Yet nationwide, banks, which received billions in federal taxpayer dollars, say they are looking to lend.

But a lingering lack of confidence and record-low use of existing credit lines by healthy businesses, Mr. Kovacevich said, is what’s dragging lending down.

"Line usage is at an all-time low," he said. "You have to ask yourself: Does it make sense for a bank to be lending to people who are on the fence when the guys who have the line aren’t using it?"

He noted Wells Fargo’s business customers’ credit line usage is at about 41% whereas prerecession the average client used about 52%.

The metric to watch, he said, is how much of its credit line a healthy business is using.

And while Mr. Kovacevich said he was confident America’s small business owners will sense "the bottom" and know when it’s time to start investing and growing, he didn’t have the same optimism for South Florida’s residential real estate market.

"I think Florida in a way will be the last to recover," he said.

Citing speculative construction combined with Florida’s transient and seasonal population, Mr. Kovacevich argued that the profile of a Florida homeowner is different than many around the country. And that profile, he said, will slow the market’s recovery.

"We put people in homes we shouldn’t have, but here, this was all on speculation, and the second issue, which is unique to Florida, is that these are a lot of second homes," he said. "If there’s one thing you’re going to default on and become delinquent, it’s your second home.

It doesn’t have "the same importance to the existing customer and it’s harder to sell to a new customer a second-home issue than a first-home issue," he added.

And while many of South Florida’s business and political leaders search high and low for what they hope will be a recession-proof industry, Mr. Kovacevich was bullish on the future of international finance and trade, especially with Latin America.

"I think most businesspeople you’re going to ask, most economists, most bankers, see that exports are one of the positive things in this recession," he said. It "appears other countries are coming out of this first. That supports exports, the weaker dollar supports exports and our natural innovation."

And with the acquisition of Wachovia, Wells Fargo got a correspondent banking business that links it with large banks around world. The added division could make Wells Fargo a major player in the export-import financing industry, which could create new opportunities for many of Miami’s export companies based near Miami International Airport.

"We can support our customers because of the strong relationships we have with the best banks in the various countries of the world," Mr. Kovacevich said. "We actually have a competitive advantage because that linkage supports both imports and exports in the US. So if somebody here wants to export, we have the best bank in every country in the world that will support whoever is importing their goods."

And while the near collapse of the financial system last year made the term "too big to fail" commonplace, Mr. Kovacevich, who was one of the first bankers to embrace the idea of selling customers multiple products, such as insurance, investment services, banking and credit, said the model is here to stay.

"If the growth comes from selling that customer additional products that aren’t lending products, insurance, mortgages — we sell our mortgages, credit cards and investment services and so on — you’re increasing your size at roughly the same level of risk," he argued. "You can’t just say size is the issue…

We’ve performed better because we actually have much less risk in our balance sheet per pound of assets than other institutions, because they haven’t done anywhere near the amount of cross sell" we do.